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Multiple Choice

[The following information applies to the questions displayed below.]
Salem Co.has outstanding $100 million of 7% bonds,due in 7 years,and callable at 104.The bonds were issued at par and are selling today at a market price of 94.
-If Salem Co.calls $10 million of these bonds it will report:

A) A $700,000 gain.
B) A $400,000 loss.
C) A $600,000 gain.
D) Neither gains nor losses are recognized on early retirements of debt.